TheCorporateCounsel.net

We’ve just posted the registration information for our “Proxy Disclosure” & “Executive Compensation Conferences” – which will be held virtually October 13th – 15th. We’re excited to offer a format that can be either “live & interactive” or “on-demand” (your choice! or do both!) – to deliver candid & practical guidance, direct from the experts.

These Conferences will help you tackle ESG & executive pay issues that will be essential to your proxy disclosures and engagements. Check out the agendas – 17 panels over three days.

Early Bird Rates – Act Now! As a special “thank you” for early registration, we’re offering an “early bird” rate for a limited time to both members & non-members of our sites. In addition, anyone who subscribes to one of our sites will get a special “member discount” when they register for these Conferences (both of the Conferences are bundled together with a single price). Register online or by mail/e-mail today to get the best price and make sure that you’ll have access to all of the latest guidance.

ICOs: Investment Advisers Face Scrutiny

This Reuters article says that in his confirmation hearings last week, SEC Chair nominee Gary Gensler signaled openness to additional crypto regulations if his nomination is approved. Overall, the remarks seem pretty non-committal. But in the meantime, the SEC’s Examinations Division has issued a risk alert to explain its continued focus on digital assets – in particular, the Staff will be taking a closer look at the practices of investment advisers to make sure that digital assets are properly classified as “securities” when necessary, and at the disclosures those firms are making about the risks of crypto purchases.

The risk alert also casts a spotlight on transfer agents using distributed ledger technologies and says the Examinations Division will review whether those services comply with Exchange Act Rules 17Ad-1 to 17Ad-7. See this Mayer Brown memo for more details & practice implications.

“Machine Readable” SEC Filings: What Does It Mean?

I blogged recently about how the year-end report from the SEC’s Investor Advocate urged the Commission to adopt rules that would make companies’ SEC filings machine-readable. This paper points out that corporate disclosure has already been reshaped by machine processors, since those types of downloads have been steadily increasing over the past 15-20 years – and looks at how companies are adjusting their SEC disclosures when they know that machines are doing the reading.

“Machine readability” means that it’s easy for machines to separate and extract tables and numbers from text, it’s easy to identify tabular info because of clear headings, column separators and row separators, the filing contains all the needed info (without relying on external exhibits) and the characters are mostly standard ASCII. See page 31 for examples of high and low machine readability, pulled from actual reports. The researchers say that we humans are starting to make adjustments in our behavior to cater to our robot friends:

Our findings indicate that increasing AI readership motivates firms to prepare filings that are more friendly to machine parsing and processing, highlighting the growing roles of AI in the financial markets and their potential impact on corporate decisions. Firms manage sentiment and tone perception that is catered to AI readers by differentially avoiding words that are perceived as negative by algorithms, as compared to those by human readers.

Such a feedback effect can lead to unexpected outcomes, such as manipulation and collusion (Calvano, Calzolari, Denicolo, and Pastorello, 2019). The technology advancement calls for more studies to understand the impact of and induced behavior by AI in financial economics.

– Liz Dunshee